Inherited IRA RMD
My client who owned an IRA passed away in Oct 2017. By the time her 2 beneficiary children were ready to deal with money it was December. Due to the death the IRA custodian did not distribute the RMD that was scheduled in December. The bene children established inherited IRA’s but the IRA funds did not transfer into them until Jan 2018. So the mother’s RMD for 2017 was not taken.
Am I correct in understanding the 2 children need to split the 2017 RMD amount and have it distributed now from each of their Inh. IRA’s. The children also each need to take an RMD for themselves in 2018 as well. Should both children file IRS form 5329 for the missed 2017 RMD?
Thanks!
Permalink Submitted by Alan - IRA critic on Tue, 2018-02-20 19:10
The year of death RMD can be taken in any combination between the two, as completion of the year of death is a joint responsibility of all beneficiaries. One may need the money more than the other. This calls for communication so that the 5329 forms can be correct. If one of them decides to take the full year of death RMD and agrees to file a 5329 showing the entire amount, the other could avoid filing a 5329. Of course, simply pro rating the RMD is simpler. There have been no reports of the IRS penalizing a beneficiary that takes out their share if the other takes out nothing. In other words, at worst the IRS would penalize only those that fail to distribute their share of the year of death RMD. The beneficiary RMDs for 2018 and later must be distributed in 2018 by the applicable beneficiary. Both the year of death RMD and 2018 beneficiary RMD are reported on the same 1099R for the beneficiary that received the distribution. No 5329 is required on the decedent’s final return.
Permalink Submitted by steve harper on Tue, 2018-02-20 20:05
Thank you very much for your insights and expertise. Very appreciated and very amazing knowledge!